The Swiss Bankers Association is issuing new self-regulatory guidelines governing the information banks must provide to investors about structured products, implementing the provisions of the Federal Act on Collective Investment Schemes governing investor protection with regard to this type of investment.
The guidelines are designed to increase transparency for the investor while at the same time preserving the ability of issuers to innovate. They have been approved by the Swiss Federal Banking Commission and will come into force on July 1.
The market for structured products is growing rapidly, the association notes. According to the Swiss National Bank, the value of structured products held in clients' custody accounts in Switzerland reached CHF284bn at the end of last year.
The Collective Investment Schemes Act, which came into force at the beginning of this year, requires banks to produce a simplified prospectus with information to help protect investors in structured products. According to the CISA Ordinance, responsibility for the contents of the prospectus lies in principle with the issuers of structured products.
The association has formulated the new guidelines to set minimum standards for the information that banks must provide to investors. The SBA is convinced that self-regulatory guidelines will work in the best interests of investors by creating greater transparency and better protection while avoiding unnecessary bureaucracy and overregulation that might otherwise restrict innovation.
The guidelines in principle are restricted to unlisted structured products offered to the public in or from Switzerland. However, no simplified prospectus is required for products that will be quoted on the SWX Swiss Exchange because the information issued by SWX for these products will cover the transparency requirements imposed by law.
Nor do the guidelines apply to products for which a prospectus compliant with the EU Prospectus Directive is available. In addition, a simplified prospectus is not required for products sold exclusively to qualified investors. The guidelines also stipulate that structured products do not need approval from the regulator and are not subject to CISA.__
The guidelines provide details about the points a simplified prospectus must cover to offer improved transparency for investors not only about the product itself but also about the risks associated with structured products and their issuers. They will not apply retrospectively to previously issued products.